“Amazon.com shares tumbled Thursday after the e-commerce giant posted a wider-than-expected $126 million loss for its second quarter despite revenue of $19.34 billion,” Jefferson Graham reports for USA Today. “Amazon CEO Jeff Bezos didn’t address the loss in the earnings release, but mentioned new ventures. ‘We continue working hard on making the Amazon customer experience better and better,’ he said in a statement.”

“Shares of Amazon plunged 10%, to $322.50, in after-hours trading. The company announced its results after markets closed,” Graham reports. “Amazon’s expansionist spending spree is taking its toll. Beyond the $126 million loss, it said it expects to lose up to $810 million in the upcoming quarter — compared with a $25 million loss in the third quarter last year.”

“Forrester analyst Sucharita Mulpuru blamed the loss solely on Amazon’s Prime program, which offers two-day free shipments to customers for $99 a year,” Graham reports. “‘Google, Apple and Facebook invest all the time in innovation, and don’t have losses like this,’ she says. ‘The big difference is Amazon is spending all this money on shipping those orders.’ The costs of free shipping are larger than Amazon expected when it started the program. Amazon, she says, has ‘created a beast they now have to feed.'”

“On Friday, the online retail giant expands into the cutthroat world of smartphones with its first attempt, Fire, joining a crowded market that includes Apple, Samsung Electronics and Microsoft,” Graham reports. “Last week, it also launched an e-book subscription service, Kindle Unlimited, offering access to 600,000 e-books and audiobooks for $9.99 a month. Critics were not kind, noting that most current fare is not included with the service. Reviews for the new Fire haven’t been raves, either.”

MacDailyNews Take: Looks like investors are finally beginning to grow tired of this money-burning warehouse with a website run by a bald midget with a massive Napoleon Complex. Peddling plastic app-starved pretend iPhones and fake iPads isn’t going to come remotely close to covering your astronomical shipping costs, Jeffie.

While I think Amazon is a stupidly run company that has a stock price WAY to high for its quality…… I do not mind Amazon prime. I used to buy items (usually from third party vendors) and had to wait to buy 3-4 at a time so I could combine shipping. Now I order each one, one at a time. Its free and a two day shipment.

Remember, while Bezos is a tool, there are tens of thousands of people selling their goods thru Amazon. They will suffer if Amazon crashes.

Remember, the Detroit auto makers went to bankruptcy making hundreds of billions in annual revenues. So, Amazon’s business model is extremely dangerous. This company could collapse in a matter of months, if slight disruption occurs.

How to make a loss? Easy: put a number in this column, take a number from last year, take this year and defer to next year, move this over there… And pay no taxes… And tell yourself that the loss you report won’t dramatically effect your stock valuation.

I like using Amazon, and have been a Prime member since the start. But it’s basically a glorified grocery/department store: high sales, low margins, low profits. It’s a fine business to be in, but the P/E multiple is way out of line.